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Euro Q4 Technical Forecast: Balance of Risk Tilts to the Downside

Euro Talking Points:

  • Below is a preview from the Q4 Technical Forecast for the Euro.
  • To access the full forecast for the Euro, click on the link below.

During the third quarter, EUR/USD’s price action was unimpressive, at least up to the day this report was prepared. Volatility was mostly muted, as the daily chart shows, with the pair moving inside a range of approximately 250 pips. Seasonality is to blame for the lack of outsize swings, as summer is usually characterized by lower volume and fewer financial transactions.

Despite the market’s lethargy, EUR/USD edged marginally down. It continued to trade within the confines of a medium-term descending channel and established lower highs from the previous quarter – bearish cues in both cases. The most ominous signal occurred in late July, when a “death cross” developed on the daily chart. A death cross, which occurs when the 50-day SMA pierces the 200-day SMA from top to bottom, is considered a sign of weakness and, in many cases, portends significant losses for the underlying asset.

EUR/USD Daily Chart

EUR/USD Daily Chart

Chart created withTradingView

— Written by Diego Colman